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# answer 4 - not go very low At a price of \$7 the quantity...

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4. Suppose the government imposed a minimum price of Price Quantity Demanded Quantity Suppplied \$1.00 500 100 \$2.00 400 120 \$3.00 350 150 \$4.00 320 200 \$5.00 300 300 \$6.00 275 410 \$7.00 260 500 \$8.00 230 650 \$9.00 200 800 \$10.00 150 975 Solution: When the Government imposes a minimum price of \$7, it is a price floor. A price floor is the lowest legal price a good or a commodity can be sold at. In this case, the price floor is in favor of the suppliers so that the price do
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Unformatted text preview: not go very low. At a price of \$7, the quantity demanded is 230 whereas the quantity supplied is 500. In this case, at a price of \$7, the quantity demanded is much lower than the quantity supplied. As a result, there will be extra supply and surplus of goods available. \$ 7 What would occur?...
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